Many small firms risk going out of business because of the impact of rising fuel bills, according a survey by Electricity4Business.

The research found that 20% of small businesses employing less than 20 members of staff now spend more than 10% of their annual turnover on energy bills, with a further 22% spending between 5-10%.

As a result, energy bills have now become the second biggest cost for small firms, second only to staff wages and recruitment costs, and ahead of rent, equipment costs and insurance.

But, according to the study, many small businesses are not doing all they can to minimise bills. Only one in five knew when their contract was up for renewal and 51% admitted they didn't read the terms and conditions so were unaware of their contractual obligations.

"According to consumer group Energywatch, one in six households is living in fuel poverty but here we are facing a situation where one in five small businesses, with the potential for many more, are forced into a similar situation," said Jonathan Elliott, from B2B comparison website MakeItCheaper.

"But businesses are not helping themselves and a lack of understanding about contractual obligations and not enough shopping around for cheaper quotes when contracts come up for renewal is costing these companies dear.

"By understanding their contract and benefiting from the support available from alternative suppliers and industry bodies, businesses can reduce the financial impact of high energy bills," he added.

This attitude was borne out by responses to questions on whether companies were under contract at all. Almost a fifth (18%) said they had no idea whether they were under contract and ‘just paid the bills', while a further 32% said they did not understand the breakdown of their bill.

"It is crucial that businesses understand the point at which their contract comes up for renewal so they can shop around and avoid being rolled over into an ‘evergreen' contract at a higher unit price," said Graham Paul, sales and marketing director at Electricity4Business.

"This research shows that only 20% know when their contract is up for renewal but perhaps most worrying is the fact that 43% believe that their energy supplier is dishonest with them due to some of the tactics employed."